Notes on American life from American history.

Opening Day, 2017: Inequality on the Field, in the Stands

Baseball is America and vice-versa. That’s the die-hard baseball fan’s credo and I’m sticking to it.

Bumgarner ($12m/yr) homers off Kershaw ($33m/yr)

One way it is true in the modern era is the increase in inequality in America and in baseball–both on the player side and on the fan side.

On the Field

The curtailing of restrictive contracts and the start of free agency for major league baseball players in the mid-1970s set up something close to a free market in baseball talent. Once a player has gained six years of experience at the major league level, he is free of the team that brought him to the majors and can offer his services to the highest bidder. The result has been a rapid escalation in players’ earnings and a widening of the earnings differences among them.

The figure below shows what has happened (drawn from here and here). The superstars raced far ahead of the average MLB player. They brought in about five times the average player’s earnings in the early 1970s but about nine times that in the 21st century. (The peak maximum in 2010 was the anomalous Yankee, Alex Rodriguez; the current king of the hill is the Dodgers’ Clayton Kershaw at $33m a year, although by another calculation, it’s the Diamondbacks’ Zack Grienke at $34.4m.)

Inequality grew at the bottom as well. The average player in the early 1970s made about two-and-a-half times the minimum salary for a player but in recent years has made about seven-and-a-half times the minimum.

As pay inequality widened among major leaguers, players as a whole equalized their financial positions vis-a-vis owners. A couple of generations back, player salaries amounted to about 20 percent of total revenues; in recent years, players have taken home about 50 percent of all the income. (There is some debate over whether that share has dropped or stayed level recently–see here and here.) That the players, the ones who provide the entertainment, have gotten a bigger share of baseball’s revenue over the years is probably widely seen as a good. Even a mere $535,000 a year, the minimum MLB salary for 2017, puts the bottom-rung player roughly in the “one percent.” And, by the way, one major reason that at least the average and the new players have done better in recent decades is that baseball players have a strong union.

Meanwhile, the gap between major league and minor league players has widened. Minor-league players remain tied to their organizations and earn under $42,000 a year, usually closer to $10,000.) Even low minor-league players, it should be noted, were probably the best athletes in their communities, but until they make it to “The Show,” they get, in effect, less than the federal minimum hourly wage.

The MLB players union seems to believe that soaring superstar salaries raise the financial standards for all players. There is no salary cap in baseball, so there is no necessary trade-off between what the superstars get and what their teammates get. But any team’s total resources are limited by its market and so an argument can be made that non-superstars are losing out as the labor market approaches “winner takes all.” For other observers, the key point is that the best players are now rewarded proportionally to the wins that they bring the team.

In the Stands

A new paper by Sean Dinces in Social Science History argues that much of the income for making these soaring salaries possible emerged from widening inequality in the stands. American sports franchises–all of them, but baseball notably–have since the 1950s to the increasingly catered to the most affluent fans. It’s not so much that ticket prices for standard seats have risen–they were in the $14-$16 range (2017 dollars) from the 1960s into the mid-1990s and rose moderately afterwards to about $30 now–it’s that larger portions of the seats are reserved for season ticket-holders (who, of course, must buy 81 games) and reserved for premium seating like suites and luxury boxes. Most buyers of season tickets and suites are businesses, not average or even merely affluent fans. New baseball stadiums in the last couple of decades have fewer seats in total than the ones of the previous generation, but more seats today are “premium.” Dinces calculates that as a result there are 25 percent fewer “non-premium” seats in today’s MLB parks now than in ballparks they replaced.

Dinces does not address the migration of televised games from general broadcast stations (like Chicago’s WGN) to expensive cable networks (such as has happened in the notorious case of the Dodgers), which has furthered inequality among fans at home. Indeed, it is television revenue, increasing nine-fold in real dollars between the mid-1970s and early 2000s, that has made it possible for star players to reap their new rewards.

Baseball is America; America is baseball. In growing inequality, as in many other aspects.

Meanwhile, one way or another and if only on radio for some, baseball, with all its drama, romance, and morality plays, is back!

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